Académique Documents
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Business documents provide information needed for the business to function efficiently. Information
is required for accounting purposes to ascertain whether profits or losses are being made.
Documents are also needed as evidence for example orders placed for goods and payments made.
Documents also provide information on commodities in stock and prices.
Business Documents For Various Purposes
(a) Letter of Enquiry is sent by persons who wish to be informed of what goods and services and
the prices of these that a company offers for sale.
(b) The company may resend either a quotation or a catalogue
A catalogue is a booklet with a brief description and pictures of articles for sale. Since a catalogue is
costly, some companies opt to send a quotation instead. A quotation lists all the goods in stock along
with their prices.
(c) If there is an interest to purchase an item in the catalogue then an order letter is sent requesting
goods to be supplied.
Types Of Production
Primary Production
This includes all kinds of extractive industries such as agriculture, mining and fishing.
Secondary Production
This includes manufacturing such as assembling, refining and construction (building) industries.
Tertiary Production
This includes all kinds of service industries such as transportation, communication and tourism.
Linkgae Industries
This refers to industries that are connected because they depend on each other to obtain or to sell
raw materials.
Forward Linkage
If the final product or finished products of one industry is used in another industry as its raw
material then a forward linkage occurs. For example, sugar produced from a sugar factory is used by
a bakery to make pastries. Sugar is therefore the end product of one industry and used as raw
material in another. Other examples include agriculture and canning, lumber and construction and
cattle farming and meat processing.
A backward linkage occurs when the demands of an industry leads to the establishment of other
industries to produce for the needs of this industry. For example, the establishment of several
multinational fast food restaurants in the Caribbean has led to new businesses being established to
supply these restaurants with raw materials (vegetables, ground provisions, meats and paper based
products).
Factors That Determine Business Location
The location identified for the operation of a business will impact on its success or failure. An
unsuitable location can result in high operational costs or low sales volume. Business owners must
therefore consider the following factors when choosing a location.
The proximity to customers
It is important that business owners give customers easy access to goods and services. Shopping
plazas in very central locations are very popular locations for businesses. Many companies now opt
for selling online and therefore do not need to be centrally located.
The proximity to raw materials
It is more cost effective for a business that uses raw materials that are heavy and or bulky to locate
close to the source of raw material. For example, bauxite processing plants are located close to
mining areas and sugar factories are located close to sugar fields.
Availability to suitable labour supply
A business will need adequate number of workers who posses the skills suitable for the creation of its
goods and services.
Adequate Infrastructure
Firms will locate where there are adequate supplies of water, lighting, airports, seaports, good roads,
transportation, and communication facilities.
Functions Of A Small Business
Supplying goods and services that satisfy demand
Identifying a particular need in a market and developing a product that will supply that market need
improves standard of living and increases the overall revenue (GNP) earned in a country. Small
businesses have the advantage over large businesses to identify changing market trends as they are
closer to the customers. They are also able to produce unique products to suit the needs of each
customer.
Creating employment
Small businesses account for a large percentage of total employment in Caribbean economies.
Making profits
The main purpose of starting and operating a business is to make profits. Profit makes it worthwhile
for the entrepreneur to continue business. Profit earned may be reinvested to expand the business.
Difference Between Market And Marketing
A market is any space within which trade takes place between buyers and sellers for a well defined
product. This space can be a produce market, a shop, internationally between countries or over the
internet.
Marketing is all those activities that facilitate trade. These include activities that identify consumers’
needs such as market research and those activities that satisfy consumers needs e.g., packaging and
distribution. Marketing activities therefore support the marketing of goods and services.
Marketing Activities
Market research – the process of gathering information about potential customers.
Packaging – creating a suitable package for product usage and for advertising
Branding - differentiating the product of a company from other brands and establishing loyal
customers.
Pricing - identifying the right price that will encourage sales
Advertising – methods used such as the media to inform and encourage the purchase of goods and
services
Sales promotion – short-term methods used to encourage consumers to buy during a specified
period
Distribution - methods used to make the product available to consumers. For example wholesale,
retail or internet.
The Marketing Mix
The marketing mix also referred to as the 4 Ps of marketing, categorizes all the various strategies
used in the marketing of goods and services. These categories are product, promotion, pricing and
place.
(1) Product this includes product designing, packaging, labelling and branding.
(2) Promotion advertising, public relations and sales promotions.
(3) Pricing includes various pricing strategies and methods.
(4) Place distribution of products.
Market Research
Market research is the gathering, recording and analysing of data to address the marketing problems
of a business. Market research must be specific to the problem of a business. The marketing problem
must therefore be clearly identified so that the appropriate market research may be conducted.
Types of Market Research
Consumer Research – garners information on consumers’ feelings, thoughts and reactions towards a
company’s good or service.
Product Research – determines customer acceptance of the product.
Distribution Research – used to identify the most suitable channel of distribution for particular
products.
Advertising Research- Identifies the most suitable media to present the advertising message.
The Marketing Research Process
This consists of five steps:
1. Identifying or defining the problem.
2. Developing information sources.
3. Collecting the information.
4. Analysing the data by using charts and graphs
5. Presenting the findings.
Reasons for Conducting a Market Research
Market research provides managers with current, relevant, accurate and reliable information
concerning competitors, advertising, distribution and potential and loyal customers. This
information assists managers in making decisions about packaging, product design, pricing,
distribution and advertising.
Factors That Influence Consumer Behaviour
The following factors will cause consumers to either increase or decrease their demand for a product.
-The price of a commodity
Consumers can afford to buy more of a good when its price falls and less when its price rises.
-The prices of other goods and services (substitutes and complements)
Substitute products are those that can be used alternatively as they satisfy the same need for a
consumer. For example, a weekly shopper may decide to purchase fish instead of chicken because the
price fish has fallen significantly less than the price of chicken. Therefore either fish or chicken will
be adequate for dinner. If by the next week the price of fish rises and becomes more expensive than
chicken then the consumer will opt for chicken.
Complements are goods that are used together e.g. bread and butter. If the price of butter rises then
its demand will fall and so will the demand for bread. Conversely if the price of butter falls, its
demand will rise and so too will the demand for bread.
Income of consumers
As income level rises consumers will demand more goods and services
-Taste and Preferences
A change in consumers taste for goods and services will impact their demand.. For example, changes
in fashion will result in a drastic decline in demand for an out going fashion and a rise in demand for
what is trendy.
-Expectations of a future Rise in Price
If consumers expect the price of a commodity to rise in the near future, they will try to purchase
more now, before the price increases.
-Brand Loyalty
Brand loyalty will ensure a continuous demand for a product regardless of changes in its price or the
prices of other goods and services.
-Spending Patterns
Consumer spending surveys compile information on consumer spending patterns based on income
levels. This informs businesses of what goods and services are in demand.
-Changes in the size of the population
A population decline will cause demand to fall in a particular region. One reason for a population
decline in a region is migration.
Packaging And Presentation Of Goods
Packaging refers to designing and producing the container that holds the product. A good package
must identify, protect and advertise the product. It must also make the product convenient to use.
Therefore products such as toothpaste are best packaged in a tube as it has to be squeezed out. Milk
must be pored from its container. Egg containers are so shaped to hold them securely.
A package must also sell the product. It must first attract customer to buy. It must provide
information about the product i.e. ingredients, amount of contents, price, the name and address of
the manufacturer and instructions for usage. The brand name is also displayed on the package.
Branding
A brand is any identifiable feature of a product which makes it different from its competitor. A brand
may be a name, term, symbol, design or combination of these. Examples of brand names include:
Avon and Colgate. A brand symbol e.g.
represents the Nike brand. A branded product will increase the value of the product in the eye of the
consumer.
Methods Of Promoting Sales
Promotion includes all forms of advertising, public relations and sales promotion.
Advertising is the paid presentation of goods or services through the media for the purpose of
encouraging consumer patronage. The media refers to television, radio, magazines, newspapers,
billboards, websites etc.
The Purpose of Advertising
-to attract attention
-to inform customers
-to increase sales
Sales Promotion
Sales promotion is a marketing strategy that is used to induce customers to buy immediately.
Examples of sales promotion methods are:
a. A sale on items.
b. Bargain packs, e.g. ‘two for price of one’.
c. Coupons. These are printed in the daily newspaper or magazines. The holders of coupons
are allowed a discount on the items bought.
d. Games, e.g. guessing riddles
e. Contest. Purchasers may receive a prize if they are the winners of a contest.
f. Trading Stamps. These are given to purchases with each item bought. Booklets filled with
these stamps may be returned by customers for goods, services or money in exchange.
g. Loss–Leader. A loss-leader is a product that is in high demand and is therefore used to attract
consumers to a business location by cutting its price very low. The business uses a loss leader to
attract large number of persons to its location so that other items will be sold. The profits lost on this
product will be made up on the high sales turnover of the other products that will be bought along
with the loss-leader.
Public Relations
Public relations activities are aimed at creating a favourable impression of a business in the eyes of
the public. Public includes its customers, its suppliers, the government and the surrounding
community. Public Relations activities include sponsorship of local sporting events, press
conferences, and donations to charity.
Techniques Of Selling
These are methods used to sell products more effectively by focusing on each customer’s personal
needs. Selling techniques include:
1. Personal Selling
2. After-sale services such as warranty and installation
3. Merchandising
4. Good Customer Relations
Personal Selling
This is the use of sales persons to present and sell goods and services of a firm. Sales persons
promote a firm’s goods directly to a specific consumer. They locate new customers, provide display
services, demonstrate the use of products, deliver goods, collect payments and provide the firm with
feedback
After Sales Services
Customers are entitled to these services once they have made a purchase. They include delivery,
installation and warranty. These services are free and therefore usually encourage consumers to buy.
Merchandizing
Merchandizing refers to self service methods of sale. This is used in supermarkets and department
stores. It allows for a better display of goods and creates a more comfortable shopping environment.
Good Customer Relations
Building good relationships with customers ensures customer satisfaction, repeat customers and
recommendation to new customers. The sales staff must be trained in the principles of good
customer relations. This entails, listening to customers being helpful and polite.
Terms Of Sale
A business establishment may offer its customers various terms to settle accounts.
Cash
This is preferable by most businesses and therefore customers are encouraged to make cash
payments. They are usually offered a lower payment amount for goods bought for cash.
Credit
Customers are allowed to pay at intervals over a short- term, usually one to three months to settle
outstanding balances.
Hire Purchase
Hire-purchase is a long term payment plan e.g. 24 – 36 months. Interest is charged to the customer
increasing the amount owed.
Cash Discount
A cash discount is a reduction in the price of a good that is paid for immediately or over a short
period of time by a customer. For example, if a an appliance store offers 5% discount on items
bought for cash then 5% of the sale price would be deducted from the actual bill
Trade Discount
A trade discount is the reduction in the price of a good given by a manufacturer or a wholesaler to a
retailer to allow the retailer to make a profit or to encourage bulk buying. Thus if an appliance
manufacturer offers 10% trade discount to retailers then 10% of the catalogue price or the quoted
price would be deducted from the retailers’ actual bill.
Consumer Organizations
Consumerism is defined as the education and the protection of consumers to prevent their
exploitation.
Consumer exploitation includes:
-overcharging
-offering poor quality goods and services
-short measurements and weights
Consumerism is practised by various groups in the economy: the government, private nstitutions,
and private firms.
Consumerism practiced by the government
This is done through various government agencies. These include:
1. The Consumer Affairs Commission – This institution was set up to disseminate information about
consumer rights and responsibilities as well as provide consumers with an avenue for redress if they
are exploited.
Consumer Rights
-The right to safety
-The right to be informed
-The right to choose
-The right to be heard
-The right to redress
-The right to consumer education
-The right to a healthy environment
Consumer Responsibility
-The responsibility to beware
-The responsibility to be aware
-The responsibility to think independently
-The responsibility to speak out
-The responsibility to complain
-The responsibility to be an ethical consumer
-The responsibility to respect the environment and avoid waste, littering and contributing to
pollution.
2. The Fair Trading Commission – This agency was set up to administer the fair trading act. It is
concerned with matters such as; Tied selling (marrying of goods), misleading advertising (untruths
about goods and services presented for sale), untrue sale (an announced sale for which the price of
items remain the same).and the use of market dominance to squeeze firms out of the industry (For
example, large firms may drop the price of their goods so low that small firms are unable to compete
with them.)
3. The Bureau of standards -The bureau carries out regular checks on business enterprises to ensure
that goods and services offered for sale meet the standards stipulated by this institution.
4. The Ombudsman
The Ombudsman is a government official who protects the rights of citizens who may suffer any kind
of injustice from dealing with a government agency or a government official. For example, the
Ombudsman will investigate the death of a loved one due to the negligence of a public hospital.
Consumerism practiced by private Institution
-Local consumer groups
-Radio talk show hosts listens to consumers’ complaints
Consumerisms practiced by private firms
-Offering warranty/guarantees on items sold
-Labels carry information on ingredients, nutritional content and health risks that may be associated
with the product.
Methods Of Retailing
There are several methods by which retailers can offer items for sale.
Community Shops and Convenient Stores
These locations tend to serve a particular community. Opening hours include all weekend days,
holidays and very late in the evenings. Costs for some commodities that are not government
controlled tend to be higher than other types of retail outlets. Community shops in particular cut and
shape products to suit customers and offer credit.
Department Stores
These stores carry a several lines of goods under one roof. A department store may feature a clothing
department, household items, stationery, hardware etc. It provides convenience to customers who
can pick up several items in one place, and allows the businessman the cost effectiveness of operating
several business entities in one location.
Mail Order
Companies that retail through mail order benefit from reduced operational cost of location and staff.
Since display areas are not required only an office and storage facility are necessary for the operation
of this business. Orders are made from catalogues and goods are delivered by courier or mailed to
customers. This saves time and effort of consumers to visit shopping locations.
E-commerce
Orders are made by customers over the internet from the websites of businesses. Payments are also
made over the internet. Packages are delivered by mail or courier.
Tele- marketing
Tele –marketers introduce the company’s goods and try to obtain orders via the telephone.
Vending Machines
These self-service machines are placed at various locations by their owners. Customers are required
to place the required funds inside these machines and are then instructed on how to make their
choice. The machine then dispenses the product. This type of business is very cost effective as owners
may only pay a fee for locating the vending machine.